Source. R.E. Park, "The Exclusivity Provisions of the Federal

Communications Commission • Table Televisive Regulations, *

Table 2, p.5.

analysis, costs and prices have been measured in 1970 valuescosts, revenues and rates of return are consequently in "real" terms. Except for rules changes since July 1970, cost figures are based on Coranor and Mitchell's detailed report. Throughout this study when discussing the size of a cable system we refer to the number of subscribers in its fifth year of operation, at which point it has virtually achieved its final size.

Our analysis includes revenues from subscribers, determined by penetration rates dependent on local and distant signals carried, and a realistic amount from advertising on a local origination channel. No revenues or costs have been attributed to the development of leased channels.

All systems considered in this study are newly constructed. The effect of potential copyright fees on existing systems in comparable market circumstances would be somewhat different only in the short run. For several years, these already-built systems would experience reduced profitability and the systems' owners would earn lower returns than they had anticipated. At the same time, revenues would still exceed operating costs, so that the original systems would not actually go out of business. But subsequently, when the systems required rebuilding, the copyright fees could make remonstration unprofitable, since nearly the same investment considerations apply either to rebuilding an existing system or to constructing the same system in a similar but unwired community.

MARKET CATEGORIES AND SYSTEM LOCATION

In examining the probable effect of various provisions for payment of copyright fees we will e nsiler separately the

characteristics of typical cable systems in four types of marketsi

the top 50 markets, markets ranked 51-100, markets below 100,

and areas located outside television markets. The FCC rules permit different signal carriage in each of these situations, and impose differential requirements affecting system costs. In addition, the density of housing, the prevalence of underground utilities and the level of family income also varies by market size. A tabular ummary of these major market characteristics is set forth in

As R. E. Park's econometric findings 2′ strongly demonstrate, the location within the market is also of fundamental importance to determining penetration levels. For this study we therefore aut divide each of the markets 1-50, 51-100, and 100+ into typical "middle market" and "edje market" systems. M. 13'e market locations are close to off-the-air signals, while exe market systems are approximately half-way between the transmitter and the Þeonthur limit of the local signals, (The firth category, an *outaile market" system, is necessarily at or bey and the Incation of a typical eye market system.) Thas the typical systems to be analyzed fall into one of seven boxes in the following matrixi

¿' "Prospects for Cable in the 175 Largest Television Markets"

analysis, costs and prices have been measured in 1970 values: costs, revenues and rates of return are consequently in "real" terms. Except for rules changes since July 1970, cost figures are based on Comanor and Mitchell's detailed report. Throughout this study when discussing the size of a cable system we refer to the number of subscribers in its fifth year of operation, at which point it has virtually achieved its final size.

Our analysis includes revenues from subscribers, determined by penetration rates dependent on local and distant signals carried, and a realistic amount from advertising on a local origination channel. No revenues or costs have been attributed to the development of leased channels.

All systems considered in this study are newly constructed. The effect of potential copyright fees on existing systems in comparable market circumstances would be somewhat different only in the short run. For several years, these already-built systems would experience reduced profitability and the systems' owners would earn lower returns than they had anticipated. At the same time, revenues would still exceed operating costs, so that the original systems would not actually go out of business. But subsequently, when the systems required rebuilding, the copyright fees could make rennstriction unprofitable, since nearly the same investment considerations apply either to rebuilding an existing system or to constructing the same system in a similar but unwired community.

MARKET CATEGORIES AND SYSTEM LOCATION

In examining the probable effect of various provisions for payment of copyright fees we will ensiler separately the

characteristics of typical cable systers in four types of markets: the top 50 markets, markets ranked 51-100, markets below 100, and areas located outside television markets. The FCC rules permit different signal carriage in each of these situations, and impose differential requirements affecting system costs. In addition, the density of housing, the prevalence of underground utilities and the level of family income also varies by market size. A tabular summary of these major market characteristics is set forth in

Table 1.

As R. E. Park's econometric findings 2' strongly Jemonstrate, the location within the market is also of fundamental importance to determining penetration levels. For this study we therefore sut divide each of the markets 1-50, 51-170, and 100+ into typical "middle market" and "edge market" systems. Middle market locations are close to off-the-air signals, while edge market systems are approximately half-way between the transmitter and the B-contour limit of the local signals. (The forth categ›ry, an "outside market" system, is necessarily at or bey and the location of a typical edge market system.) Thus the typical systems to be analyzed fall into one of seven boxes in the following matrixi

A "Prospects for Cable in the 100 Largest Television Markets"